2022 (5) TMI 1133 - HC - Income Tax

Taxpayer's grievance from High pitched scrutiny assessment - Conflicting orders passed by National Faceless Assessment Centre - High-pitched and unreasonable assessment orders - initiation of suitable administrative action against the erring officer in case where assessments are found by the local committee to be high-pitched - a personal affidavit on behalf of Union of India has been filed by Sri Tarun Bajaj, Revenue Secretary to the Government of India wherein date of circular in paragraph 10 has been wrongly mentioned as 25.4.2022 instead 23.4.2022 and copy of said circular dated 23.4.2022 has already been filed alongwith the personal affidavit dated 3.5.2022 - HELD THAT - In instructions/ Circular F.No.225/290/2015-ITA-II, dated 09.11.2015 issued by the Government of India, Ministry of Finance, Department of Revenue (CBDT), the Central Board of Direct Taxes (for short CBDT ) itself has noted that it has been brought to the notice of Board that the tendency to frame high-pitched and unreasonable assessment orders is still persisting due to which grievances are being raised by the taxpayers. Such grievances not only reflect harassment of taxpayers but also lead to generation of unproductive work for Department as well as Appellate Authorities. Under the aforesaid instructions dated 09.11.2015, Local Committees were constituted to resolve quickly the taxpayers' grievances on account of high-pitched and unreasonable additions made by the Assessing Authorities. But it appears that tendency to frame high-pitched and unreasonable assessment orders is still persisting as also acknowledged by the respondents which resulted in issuance of instructions/ Circular dated 23.04.2022 under Section 119 of the Income Tax Act, 1961 so as to give it statutory backing. This Court is also frequently coming across the writ petitions in which impugned orders reflect nor observance of principles of natural justice and even reply submitted by assessee are not being considered by Assessing Officers under the faceless regime as well as non-faceless regime under the Act, 1961. Tax payers are one of the important pillars of economy of the country. Their harassment not only causes jolt to the economy of the country and employment but also comes in the way of economic policy of the government including the policy Ease of Doing Business . The instructions dated 23.04.2022 issued by the CBDT, in exercise of powers conferred under Section 119 of the Act, 1961 and statement made by the respondent No.1 in the aforequoted para-10 of the personal affidavit dated 19.05.2022, needs to be implemented truly and effectively. Therefore, necessary mandamus needs to be issued to the respondents. Writ petition is disposed off giving liberty to the petitioner to avail statutory remedy of appeal or revision under the Act, 1961 as he may be advised. All pending applications are disposed off. The respondent No.1 shall ensure that copies of instructions F.No.225/101/2021-ITA-II, Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes dated 23rd April, 2022 is circulated within a month from today to Tax Bar Associations at District Level, State Level and National Level for information along with the following contents of paragraph-10 of the personal affidavit dated 19.05.2022 - The said instruction also provides for initiation of suitable administrative action against the erring officer in case where assessments are found by the local committee to be high-pitched or where there is non-observance of principles of natural justice, non-application of mind or gross negligence of assessing officer/ Assessment Unit. The respondent No.1 shall ensure that the aforesaid instructions dated 23.04.2022 along with afore-quoted contents of paragraph-10 of the personal affidavit dated 19.05.2022 shall be displayed on the official website of the Income Tax Department for awareness and information of taxpayers and consultants. The constitution of Local Committees, procedure for submissions, receipts and disposal of grievances as provided in the aforesaid instructions dated 23.04.2022 and the above noted contents of the paragraph 10 of the personal affidavit dated 19.05.2022, for the purposes of publicity and awareness amongst taxpayers/ assessees to achieve the mandate of Clause 2.A.(iv) of the aforesaid instructions dated 23.04.2022, shall be published regularly for one year at least once in three months in two National Newspapers (one in English and the other in Hindi) and two State Level Newspapers (one in Hindi or Local Language and the other in English).

Summary

Issues Involved:
1. Conflicting reassessment orders by the National Faceless Assessment Centre.
2. High-pitched and unreasonable assessment orders.
3. Non-observance of principles of natural justice.
4. Administrative remedies and grievance redressal mechanisms.
5. Implementation and effectiveness of the CBDT instructions dated 23.04.2022.

Detailed Analysis:

Conflicting Reassessment Orders by the National Faceless Assessment Centre:
The petitioner argued that two separate reassessment orders were passed for the same agricultural land, jointly owned by seven persons, including the petitioner and his son. The National Faceless Assessment Centre, Delhi, accepted the son's claim that the land was agricultural and situated beyond 8 km of municipal limits, resulting in no tax imposition. Conversely, the petitioner’s claim was rejected, and the sale proceeds were assessed as long-term capital gain. This inconsistency in handling similar cases was highlighted as a significant issue.

High-Pitched and Unreasonable Assessment Orders:
The court noted the persistence of high-pitched and unreasonable assessment orders, which lead to taxpayer grievances and unproductive work for the Department and Appellate Authorities. The CBDT's instructions dated 23.04.2022 were issued to address these grievances by constituting Local Committees to deal with high-pitched scrutiny assessments.

Non-observance of Principles of Natural Justice:
The court observed that many writ petitions reflected a lack of adherence to the principles of natural justice, with assessing officers often ignoring replies submitted by assessees. This issue was particularly noted in both faceless and non-faceless assessment regimes.

Administrative Remedies and Grievance Redressal Mechanisms:
The respondent's affidavit suggested that the petitioner could approach Local Committees for grievance settlement instead of filing a writ petition. These committees are empowered to handle grievances related to high-pitched scrutiny assessments and ensure that principles of natural justice are observed. However, the court found the existing mechanism unsatisfactory as it merely provided a forum for complaint without offering relief or fixing accountability for erring officers.

Implementation and Effectiveness of the CBDT Instructions Dated 23.04.2022:
The court emphasized the need for effective implementation of the CBDT instructions issued under Section 119 of the Income Tax Act, 1961. These instructions aim to address issues related to high-pitched assessments and ensure administrative action against erring officers. The court directed several measures to enhance awareness and ensure the effective functioning of Local Committees, including:

1. Circulation of Instructions: The respondent must circulate the instructions dated 23.04.2022 to Tax Bar Associations at various levels and display them on the Income Tax Department's official website.
2. Publicity and Awareness: Regular publication of the constitution and procedures of Local Committees in national and state-level newspapers.
3. Constitution of Local Committees: Immediate establishment and functionality of Local Committees across all regions, including Pr.CCIT (Exemptions) and Pr.CCIT (International Taxation).
4. Monitoring Cell: Establishment of a monitoring cell at the government or CBDT level to ensure regular monitoring and review of Local Committees' actions.
5. Timely Disposal of Grievances: Local Committees must dispose of each grievance petition within two months, with results and administrative actions communicated to the concerned assessee within the next four weeks.
6. Regular Monitoring by CBDT: The CBDT must regularly monitor the implementation of the scheme and take necessary steps for its effective execution.

Conclusion:
The writ petition was disposed of, granting the petitioner liberty to avail statutory remedies under the Income Tax Act, 1961. The court issued a mandamus directing the respondents to ensure the effective implementation of the CBDT instructions dated 23.04.2022, aiming to resolve taxpayer grievances and ensure fair assessment practices.